nep-int New Economics Papers
on International Trade
Issue of 2020‒02‒17
34 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Will the United States Benefit from the Trans-Pacific Partnership? By Benjamin R. Mandel; Mary Amiti
  2. Is export-led growth a mirage?: The case of Kenya By Were Maureen; Wamalwa Peter
  3. The Global Impact of Brexit Uncertainty By Tarek Hassan; Laurence van Lent; Stephan Hollander; Ahmed Tahoun
  5. Regional Integration in South Asia : Implications for Green Growth, Female Labor Force Participation, and the Gender Wage Gap By Mani,Muthukumara S.; Gopalakrishnan,Badri Narayanan; Wadhwa,Deepika
  6. The border walls of (de)globalization By Kamwela, V.K.; van Bergeijk, P.A.G.
  7. Explaining World Wine Exports in the First Wave of Globalisation, 1848-1938 By Mar’a-Isabel Ayuda; Hugo Ferrer-PŽrez; Vicente Pinilla
  8. Turnin’ it up a notch: How spillovers from foreign direct investment boost the complexity of South Africa’s exports By Bjørn Bo Sørensen
  9. Measuring employment in global value chains By Peter Horvát; Colin Webb; Norihiko Yamano
  10. Why Do Turkish Firms Go Abroad to Invest? By Yilmaz Kilicaslan; Yesim Ucdogruk Gurel; Gokhan Onder; Zeynep Karal Onder
  11. Investigating double counting terms in the value-added decomposition of gross exports By Miroudot, Sébastien; Ye, Ming
  12. Exchange rates and firm export performance in South Africa By Edwards Lawrence; Hlatshwayo Ayanda
  13. Conceptual Aspects of Global Value Chains By Antras,Pol
  14. Share price reactions to tariff imposition announcements in the Trump era – An event study of the trade conflict By Sascha Tobias Wengerek
  15. An Interacting Agent Model of Economic Crisis By Yuichi Ikeda
  16. Gains from Domestic versus International Trade: Evidence from the U.S. By Hakan Yilmazkuday
  17. Competitiveness and diversification of service exports in sub-Saharan Africa: The case of the East African Community By Were Maureen; Odongo Maureen
  18. Does FDI benefit incumbent SMEs?: FDI spillovers and competition effects at the local level By Alexander C. Lembcke; Lenka Wildnerova
  19. Trade Integration, Export Patterns, and Growth in Sub-Saharan Africa By Calderon,Cesar; Cantu Canales,Martha Catalina; Zeufack,Albert G.
  20. Under Attack: Terrorism and International Trade in France, 2014-16 By Volker Nitsch; Isabelle Rabaud
  21. Developing Countries Can Help Restore the WTO's Dispute Settlement System By Anabel González; Euijin Jung
  22. Foreign Direct Investment, Information Technology and Economic Growth Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  23. Exports and long-run growth: The case of Spain, 1850-2017 By Bajo-Rubio, Oscar
  24. Industrialisation and the big push in a global economy By Kreickemeier, Udo; Wrona, Jens
  25. Have Robots Grounded the Flying Geese? : Evidence from Greenfield FDI in Manufacturing By Hallward-Driemeier,Mary C.; Nayyar,Gaurav
  26. Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse By Pamina Koenig; Sandra Poncet
  27. Natural Resource Exports, Foreign Aid and Terrorism By Simplice A. Asongu
  28. Digital Platforms and the Demand for International Tourism Services By Lopez Cordova,Jose Ernesto
  29. How Technology Adoption and Trade Are Shaping Indonesian Labor Markets By Viollaz,Mariana; Darko,Francis Addeah; Mason,Andrew D.
  30. Does a Data Quirk Inflate China’s Travel Services Deficit? By Anna Wong; Matthew Higgins; Thomas Klitgaard
  31. Global Challenges and Survival Strategies of the SMEs in the Era of Economic Globalization: A Systematic Review By Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
  32. On the precarious link between the Gini coefficient and the incentive to migrate By Stark, Oded; Byra, Lukasz; Kosiorowski, Grzegorz
  33. Economic globalization is not a factor of peace By Jacques Fontanel
  34. Immigration and Offshoring: Two Forces of Globalisation and Their Impact on Employment and the Bargaining Power of Occupational Groups By Michael Landesmann; Sandra M. Leitner

  1. By: Benjamin R. Mandel; Mary Amiti (Board of Governors of the Federal Reserve System (U.S.); Schweizerische Nationalbank; Federal Reserve Bank of New York; Universität St. Gallen; Centre for Economic Policy Research (CEPR); Internationaler Währungsfonds; Research and Statistics Group; Chinese University of Hong Kong; University of Melbourne; Universitätt Bern; National Bureau of Economic Research)
    Abstract: U.S. involvement in what could be one of the world?s largest free trade agreements, the Trans-Pacific Partnership (TPP), has garnered a lot of attention, especially since the entry of Japan into negotiations last year. The proposed free trade agreement (FTA) encompasses twelve countries, which combined account for 45 percent of U.S. exports and 37 percent of U.S. imports. This broad coverage of U.S. trade seems to suggest large potential gains for the U.S. from the agreement. However, three quarters of this trade is already within the U.S. free trade agreement with Canada and Mexico (the North American Free Trade Agreement (NAFTA)), making the assessment of potential gains to the TPP less clear cut. In this post, we investigate some implications of TPP for U.S. international trade, with a focus on identifying areas with the greatest potential for liberalization and, hence, benefits to U.S. exporters and consumers.
    Keywords: agriculture; tariffs; free trade agreement
    JEL: F00
  2. By: Were Maureen; Wamalwa Peter
    Abstract: The role of exports in promoting economic growth has been widely acknowledged. This paper analyses the link between exporting and growth performance in Kenya using time series data.Despite trade liberalization and export promotion policies pursued over time, Kenya’s export growth has been sluggish and its contribution to economic growth is still limited. Notwithstanding diversification efforts, exports are still strongly geared towards primary agricultural goods.Whereas the empirical results indicate a positive long-run relationship between exporting and output, the impact of exporting on output growth is found to be statistically insignificant in the short run.Nonetheless, analysis using disaggregated export data shows a statistically significant impact of manufactured exports on economic growth. The empirical results also indicate that compared to exports, imports have a relatively significant influence on short-run and long-run output growth.This signifies the import-dependent nature of the economy. There is a need to revamp export-led growth through enhanced competitiveness and value-addition avenues such as regional and global value chains.
    Keywords: Import,import substitution,Trade,export-led growth,Kenya
    Date: 2019
  3. By: Tarek Hassan (Boston University); Laurence van Lent (Frankfurt School of Finance and Management); Stephan Hollander (Tilburg University); Ahmed Tahoun (London Business School)
    Abstract: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world; these measures are based on the proportion of discussions in quarterly earnings conference calls on the costs, benefits, and risks associated with the UK’s intention to leave the EU. We identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate effects of the different types of Brexit exposure on firm-level outcomes. We find that the impact of Brexit- related uncertainty extends far beyond British or even European firms; US and international firms most exposed to Brexit uncertainty lost a substantial fraction of their market value and have also reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects from Brexit (the first moment) should it come to pass. Most prominently, firms expect difficulties from regulatory divergence, reduced labor mobility, limited trade access, and the costs of post-Brexit operational adjustments. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet significantly affected firm actions.
    Keywords: Brexit, uncertainty, sentiment, machine learning, cross-country effects
    JEL: D8 E22 E24 E32 E6 F0 G18 G32 G38 H32
    Abstract: Abstract- The purpose of this paper is to present the literature review of the theory of the Foreign Direct Investments and the basic context related to this study. It is a fact that markets’globalization and internationalization of economic relations which have existed during the recent years, have led to a rapid increase in trade flows, money and capital flows. In such field, the multinational enterprises play the most important role in the development of Foreign Direct Investments. Initially, there is a conceptual approach to the forms of international activities as well as the basic definitions concerning Foreign Direct Investments. Therefore, it follows a description of the reasons for the implementation of Foreign Direct Investments and their forms. The three main types of Foreign Direct Investments, the factors that lead an enterprise to their realization and the incentives to attract them are listed at this paper. The literature review for this study concludes with the major empirical studies conducted on Outward Foreign Direct Investments.
    Keywords: Intex Terms- Foreign Direct Investments (FDI), Outward FDI.
    JEL: F21
    Date: 2020
  5. By: Mani,Muthukumara S.; Gopalakrishnan,Badri Narayanan; Wadhwa,Deepika
    Abstract: The study aims to provide insights to policy makers in measuring the impact of trade liberalization and regional integration measures on gender employment and wages. The study incorporates gender-differentiated employment and wages for selected South Asian economies across sectors to identify targeted value chains and economic activities, particularly among green trade sectors. This is the first major attempt to develop a gender-differentiated data set for South Asian countries, within the widely used Global Trade Analysis Project framework, to examine the nexus between trade, green economy, and gender. Two illustrative scenarios are examined. The first scenario examines a complete tariff elimination among the Bhutan-Bangladesh-India-Nepal grouping of countries in all sectors. The second scenario involves complete tariff elimination among countries in South Asia. The results indicate that a free trade agreement signed by all countries is likely to be more beneficial compared with only some countries signing the free trade agreement. Women's employment grows faster than men's employment, as most of the sectors that benefit due to these free trade agreements are women intensive. Growth in women's employment and wages in South Asia is consistent with growth in green sectors.
    Date: 2020–01–22
  6. By: Kamwela, V.K.; van Bergeijk, P.A.G.
    Abstract: Border walls have recently proliferated and become a global phenomenon with about a third of the countries having at least one wall or fence along its borders. This trend contrasts the idea of the global village and fits into a trend towards deglobalization. So far little attention has been given to their unintended effect. This article fills this gap by developing a gravity model for the years 1990-2014 regarding 118 countries, 44 (37%) of which had a wall during the research period. The impact of border structures on cross-border trade is economically and statistically significant. Countries separated by a wall trade on average 4 to 73 percent less than would ceteris paribus be the case if the border wall did not exist.
    Keywords: border wall, border fence, trade, gravity
    Date: 2020–01–17
  7. By: Mar’a-Isabel Ayuda (Department of Economic Analysis, Universidad de Zaragoza, Spain); Hugo Ferrer-PŽrez (Agrifood and Natural Resources Economics Unit, Agrifood Research and Technology Center of Aragon (CITA), Spain); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragón, Spain)
    Abstract: The objective of this article is to analyse the determinants of world wine exports in the first wave of globalisation, taking into account the principal exporting countries and using an extended version of the gravity model. Our results show that ordinary wine exports were not affected by the increase in the size of the markets of the consuming countries, as in most of them wine was an alcoholic beverage consumed by a very small minority of the population. The harvests of the producing countries, particularly in the preceding years, significantly and positively affected their exports. And inversely, the harvests of the importers harmed them as there was a home bias in consumption due to cultural, price or tariff protection reasons. Finally, in the inter-war period, the trade of wine was severely affected by a series of shocks such as the First World War, the Soviet revolution, the Prohibition and the 1930s depression. As was the case for trade as a whole, the fall in transaction costs favoured exports, at least those of lower priced and lower quality wine. However, the liberalisation of trade had a lesser impact on wine than on other products.
    Keywords: Wine history, wine trade, wine globalisation
    JEL: F14 N50 Q13 Q17
    Date: 2020–02
  8. By: Bjørn Bo Sørensen
    Abstract: Countries economic complexity, and the associated diversification and sophistication of their exports, is a key determinant of economic growth. Understanding how South African firms learn to export more sophisticated products is, therefore, an important policy issue.Using administrative data covering the entire tax-paying population of firms in South Africa, we argue that foreign direct investment can stimulate export upgrading in manufacturing firms. We find that the level of sophistication of the most complex product exported by local firms increases in tandem with the presence of multinational enterprises located in upstream, supplying sectors within the same province.The study is the first within the associated literature to (i) provide firm-level evidence of export upgrading induced by foreign direct investment in Africa, (ii) employ the fitness algorithm to measure export complexity, and (iii) detect spillover effects from foreign direct investment materializing at the top line of domestic firms’ export basket.
    Date: 2020
  9. By: Peter Horvát; Colin Webb; Norihiko Yamano
    Abstract: Growing economic integration worldwide and the spread of global value chains (GVCs) increases the sensitivity of employment in one country or region to changes in demand in other countries or regions. However, traditional statistics do not reveal the full nature of global interdependencies - notably how consumption in one country may drive production and therefore, sustain employment in other economies or, how employment in an upstream domestic industry may be affected by exporting activities of other domestic industries.This document describes the sources and methods used to produce the indicators in the Trade in employment (TiM) database. These indicators were developed, as a complement to Trade in Value Added (TiVA) indicators, to provide broad insights into the impact of GVCs on labour markets. The indicators are derived by combining the latest set of OECD Inter-Country Input-Output (ICIO) tables, covering the years 2005 to 2015, with appropriate employment by industry statistics.
    Date: 2020–02–17
  10. By: Yilmaz Kilicaslan (Anadolu University, Department of Economics); Yesim Ucdogruk Gurel (Dokuz Eylul University, Department of Economics); Gokhan Onder (Anadolu University, Department of Business Administration); Zeynep Karal Onder (Anadolu University, Department of Public Finance)
    Abstract: The aim of this paper is to examine the determinants and localization of outward FDI (oFDI) of Turkish firms that differs from developed country MNEs with respect to firm size, technology, skills and access to information about global markets. This research is the first attempt aimed to explore especially the determinants of country/region selection of Turkish outward FDI at the firm level by using discrete choice models. The findings in this paper are based on the primary data collected by in-depth-interviews with 299 outward-investing Turkish firms operating in manufacturing, wholesale and retail trade, transportation and storage, and information and communication sectors. Our descriptive findings show that 60% of the investments are green-field. We found that 68% of the investments were made in developing countries while the developed countries attracted only 32% of Turkish investments. Our findings show that the main motivation of Turkish firms investing in other counties is willingness to reach to the larger markets (77%). Our econometric findings show that the size of the firm and the parent firm are significant factors in selecting developed countries as the host country for the investment. As the size of the firm increases, the possibility of Turkish investors to choose developed countries is diminishing, while as the size of the parent firm bets bigger, the possibility of locating the investment in developed countries is rising. The high share of foreign ownership in parent firms has a positive impact on choosing developing countries to locate the investment. It seems that foreign firms benefit from the experiences of Turkish firms operating in developing markets. Finally, while willingness to avoid from tariffs has no significant impact on the probability of investing in developed countries (including EU countries), it increases the probability of investment in the member countries of Shanghai Cooperation Organization.
    Keywords: Outward Foreign Direct Investment, outward FDI, Probit, Logit, Turkey
    JEL: F12 G1 E2
    Date: 2019–11
  11. By: Miroudot, Sébastien; Ye, Ming
    Abstract: Several papers using intercountry input-output tables have developed frameworks to decompose value added in gross exports and to remove potential double-counting in intermediate inputs. But these papers rely on different definitions for the domestic value added, foreign value added and double-counting terms, depending in particular on the perspective from which gross exports are decomposed (world level, country level or bilateral level). At this stage, it is very difficult for any user of value-added trade statistics to know what is calculated and which type of decomposition should be used. In this paper, we provide a general framework that relies on extraction matrices to unambiguously and consistently define domestic and foreign value-added terms in the world, country and bilateral perspective. This framework allows us to classify existing decompositions based on the perspective taken and their definition of double-counting. We also indicate the most relevant decompositions for different types of trade analysis.
    Keywords: Trade accounting,input-output table, Value-added decomposition, Global value chains, double counting
    JEL: D57 E01 E16 F14
    Date: 2019–05–01
  12. By: Edwards Lawrence; Hlatshwayo Ayanda
    Abstract: This paper uses detailed firm transaction data on manufactured exports to analyse the dilution of the real exchange rate-export relationship in South Africa over the period 2010 to 2014.Our empirical results show that firms that are larger, have higher export shares in destination markets, and import are more likely to raise the domestic currency price of their exports in response to a depreciation, and consequently display weaker export quantity responses.The exchange rate responsiveness is also weaker for exporters of resource-based manufactured products and those that export outside Africa. South African manufactured exports are highly concentrated among a few large firms that rely heavily on imported intermediate inputs and predominantly export resource-based products.Consequently, these results provide an explanation for the low aggregate export response to the sustained depreciation over the period 2010 to 2014.
    Keywords: Exchange rate,Exports,South Africa,pass-through
    Date: 2020
  13. By: Antras,Pol
    Abstract: The paper offers an overview of some key conceptual aspects associated with the rise of global value chains (GVCs). It outlines a series of alternative interpretations and definitions of what the rise of GVCs entails, and it traces the implications of these alternative conceptualizations for the measurement of the phenomenon, as well as for elucidating the key determinants and implications of GVC participation, both at the country level and at the firm level. In the process, the paper offers some speculative thoughts about the future of GVCs in light of the advent of an array of new technologies.
    Keywords: International Trade and Trade Rules,Common Carriers Industry,Food&Beverage Industry,Pulp&Paper Industry,General Manufacturing,Construction Industry,Business Cycles and Stabilization Policies,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Industrial and Consumer Services and Products,Transport and Trade Logistics,Trade and Services
    Date: 2020–01–21
  14. By: Sascha Tobias Wengerek (University of Paderborn)
    Abstract: Employing a unique sample of 2,849 tariff imposition announcements by and against the United States (U.S.) over the period from 2018 to 2019, this study analyzes the impact of recent tariff announcements on share prices from 859 U.S. companies. We provide evidence for negative (cumulative) average abnormal stock returns due to tariff announcements during a symmetric three-day event window. We suggest that stock market investors expect adverse impacts of tariff impositions, e.g. a decrease in the companies' future cash flows and a threat of retaliation. The negative wealth effects are observed irrespective of whether the Trump administration announces safeguard tariffs to protect domestic firms or a retaliation is declared by foreign countries. Moreover, building several subsamples, we find that the adverse impact is mostly driven by announcements involving China and is associated with a variety of sector, tariff, trade and firm characteristics.
    Keywords: event study, international relations, protectionism, strategic trade policy, tariffs, trade conflict
    JEL: F14 F18 F23 F51
    Date: 2020–02
  15. By: Yuichi Ikeda
    Abstract: Most national economies are linked by international trade. Consequently, economic globalization forms a massive and complex economic network with strong links, that is, interactions arising from increasing trade. Various interesting collective motions are expected to emerge from strong economic interactions in a global economy under trade liberalization. Among the various economic collective motions, economic crises are our most intriguing problem. In our previous studies, we have revealed that the Kuramoto's coupled limit-cycle oscillator model and the Ising-like spin model on networks are invaluable tools for characterizing the economic crises. In this study, we develop a mathematical theory to describe an interacting agent model that derives the Kuramoto model and the Ising-like spin model by using appropriate approximations. Our interacting agent model suggests phase synchronization and spin ordering during economic crises. We confirm the emergence of the phase synchronization and spin ordering during economic crises by analyzing various economic time series data. We also develop a network reconstruction model based on entropy maximization that considers the sparsity of the network. Here network reconstruction means estimating a network's adjacency matrix from a node's local information. The interbank network is reconstructed using the developed model, and a comparison is made of the reconstructed network with the actual data. We successfully reproduce the interbank network and the known stylized facts. In addition, the exogenous shock acting on an industry community in a supply chain network and financial sector are estimated. Estimation of exogenous shocks acting on communities of in the real economy in the supply chain network provide evidence of the channels of distress propagating from the financial sector to the real economy through the supply chain network.
    Date: 2020–01
  16. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: Using varieties of a rich model that considers sectoral heterogeneity and input-output linkages, this paper shows that the overall welfare gains of a region within a country can be decomposed into domestic versus international welfare gains from trade. Empirical results based on sector- and state-level data from the U.S. suggest that about 94 percent of the overall welfare gains of a state is due to domestic trade with other states. The ocean states gain from international trade about two times the Great Lake states and about three times the landlocked states.
    Keywords: Welfare Gains, Domestic Trade, Sectoral Heterogeneity, State-Level Analysis
    JEL: F12 F14 R13
    Date: 2020–02
  17. By: Were Maureen; Odongo Maureen
    Abstract: Growth in service exports has improved countries’ per capita incomes, reduced over-reliance on goods exports, and promoted economic diversification. However, the growth has not been uniform across regions and countries. Africa lags behind in service exports.This paper examines the competitiveness of service exports in sub-Saharan Africa (SSA), focusing on the East African Community (EAC). The analysis shows that SSA, and particularly EAC countries, has a revealed comparative advantage in only two sectorsâ۠transport and travel servicesâ۠and lags behind in modern commercial services. Notwithstanding its comparative advantage in traditional travel services, SSA is less competitive than other regions globally, and its share of world service exports is negligible.The expansion of services trade is constrained by various factors such as non-tariff barriers, protectionist regulatory frameworks, and infrastructure constraints. There is significant room for service export growth, including unexploited service opportunities in cultural diversity, sports, business, and conferencing.
    Keywords: diversification,Comparative advantage,Competitiveness,Service exports,Sub-Saharan Africa
    Date: 2019
  18. By: Alexander C. Lembcke; Lenka Wildnerova
    Abstract: That global networks provide positive externalities to participating firms is a well‑documented fact. Less is known about how the performance of non-participating firms, especially those that are small or medium-sized, changes with exposure to an increase in the presence of globally integrated firms in their vicinity. With global trade being dominated by large firms, the benefits for SMEs are often indirect, e.g. through input relationships with larger companies or through knowledge spillovers that facilitate the adoption of best practices in firms with access to globally integrated peers. This paper combines industry and regional exposure to global links in form of foreign ownership. It uses firm-level microdata for 13 OECD countries, allowing for local spillovers (or crowding out) within the same industry and across industries. Foreign investment in the firm in the same region is associated with increasing productivity of local firms, especially in form of cross-sector externalities. Horizontal (same sector) externalities are negative, especially if they are coming from foreign firms locating in distanced regions. FDI tends to be associated with employment decline in manufacturing firms, but some growth in small firms.
    Keywords: Employment, FDI, Firms, Productivity, SME
    JEL: D22 F14 F23 F21 R12
    Date: 2020–02–12
  19. By: Calderon,Cesar; Cantu Canales,Martha Catalina; Zeufack,Albert G.
    Abstract: This paper examines systematically the growth effects of trade integration in Sub-Saharan Africa. It complements and improves upon the empirical literature in two aspects: first, it jointly estimates the impact of different dimensions of trade integration, namely, trade volumes, export/trade patterns by product (primary and manufacturing goods), and by destination (inter- and intra-regional). Second, it estimates the impact of trade integration on economic growth and its sources, that is, capital accumulation and total factor productivity growth. The analysis finds causal evidence that trade integration fosters growth. Additionally, manufacturing trade boosts growth and trade in primary goods hampers growth. Doubling the manufacturing trade share in Sub-Saharan Africa's gross domestic product would increase growth by 1.9 percentage points per year, while increases in primary trade reduce growth by 1 percentage point. This impact is mainly transmitted through lower capital accumulation. Finally, inter- and intra-regional trade have a positive impact on growth in Sub-Saharan Africa. Doubling inter-regional trade will increase growth by 1.9 percentage points, and the same increase for intra-regional trade enhances growth by 0.6 percentage points. The effects of inter-regional trade are transmitted primarily through capital accumulation, while those of intra-regional trade are channeled through enhanced total factor productivity growth.
    Date: 2020–01–29
  20. By: Volker Nitsch (TU Darmstadt - Technische Universität Darmstadt); Isabelle Rabaud (LEO - Laboratoire d'Économie d'Orleans - CNRS - Centre National de la Recherche Scientifique - Université de Tours - UO - Université d'Orléans)
    Abstract: Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyzes the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for countries with low border barriers, for firms with less frequent trade activities and for homogeneous products.
    Date: 2019
  21. By: Anabel González (Peterson Institute for International Economics); Euijin Jung (Peterson Institute for International Economics)
    Abstract: By refusing to fill vacancies in the World Trade Organization's (WTO) Appellate Body—the top body that hears appeals and rules on trade disputes--the Trump administration has paralyzed the key component of the dispute settlement system. No nation or group of nations has more at stake in salvaging this system than the world's big emerging-market economies: Brazil, China, India, Indonesia, Korea, Mexico, and Thailand, among others. These countries have actively and successfully used the dispute settlement system to defend their commercial interests abroad and resolve inevitable trade conflicts. The authors suggest that even though the developing countries did not create the Appellate Body crisis, they may hold a key to unlock it. The Trump administration has also focused its ire on a longstanding WTO practice of giving these economies latitude to seek "special and differential treatment" in trade negotiations because of their developing-country status. The largest developing economies, which have a significant stake in preserving a two-step, rules-based mechanism for resolving trade disputes, could play a role in driving a potential bargain to save the appeals mechanism. They could unite to give up that special status in return for a US commitment to end its boycott of the nomination of Appellate Body members.
    Date: 2020–01
  22. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The research assesses how information and communication technology (ICT) modulates the effect of foreign direct investment (FDI) on economic growth dynamics in 25 countries in Sub-Saharan Africa for the period 1980-2014. The employed economic growth dynamics areGross Domestic Product (GDP) growth, real GDP and GDP per capita while ICT is measured by mobile phone penetration and internet penetration. The empirical evidence is based on the Generalised Method of Moments. The study finds that both internet penetration and mobile phone penetration overwhelmingly modulate FDI to induce overall positive net effects on all three economic growth dynamics. Moreover, the positive net effects are consistently more apparent in internet-centric regressions compared to “mobile phone†-oriented specifications. In the light of negative interactive effects, net effects are decomposed to provide thresholds at which ICT policy variables should be complemented with other policy initiatives in order to engender favorable outcomes on economic growth dynamics. Practical and theoretical implications are discussed.
    Keywords: Economic Output; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2019–01
  23. By: Bajo-Rubio, Oscar
    Abstract: We analyse in this paper the relationship between international trade and economic growth from the point of view of one of the most traditional hypotheses within this field, namely, the export-led growth hypothesis, for the case of Spain in a long-term perspective of almost 170 years. Exports seem to have played a positive, though modest, role in promoting economic growth in the Spanish economy over the whole period, mostly due to the higher productivity associated with the export sector. The contribution of exports to growth, however, seems to have been stronger in the final years of the 19th century, unlike the rest of the period, where it proved to be very small.
    Keywords: Exports,Economic growth,Spanish economy
    JEL: F41 F43 N10 O47
    Date: 2020
  24. By: Kreickemeier, Udo; Wrona, Jens
    Abstract: In this paper, we develop a multi-country open economy extension of the famous Big Push model for a closed economy by Murphy et al. (1989). We show under which conditions the global economy in our model is caught in a poverty trap, characterised by a low-income equilibrium from which an escape is possible (only) via a coordinated modernization effort across sectors and countries. We also analyze to what extent the degree of openness matters for the prospects of achieving the high-income equilibrium. We show that under monopolistic competition with CES preferences the openness to international trade does not affect the set of parameter combinations leading to a poverty trap, whereas international trade makes it more difficult to achieve industrialisation through a Big Push with continuum quadratic preferences. Responsible for this adverse outcome is the pro-competitive effect of opening up to international trade, which bites into firms' profit margins, rendering the adoption of a superior production technology unprofitable as it becomes more difficult for firms to amortise their adoption fixed costs.
    Keywords: Big Push,multiple equilibria,backward linkages,international trade,globalisation,poverty trap,technology upgrading,monopolistic competition
    JEL: F12 O14 F43
    Date: 2020
  25. By: Hallward-Driemeier,Mary C.; Nayyar,Gaurav
    Abstract: For decades, manufacturers around the world have outsourced production to countries with lower labor costs. However, there is a concern that robotization in high-income countries will challenge this shifting international division of labor known as the"flying geese"paradigm. Greenfield foreign direct investment decisions constitute a forward-looking indicator of where production is expected, rather than trade flows that reflect past investment decisions. Exploiting differences across countries and industries, the intensity of robot use in high-income countries has a positive impact on foreign direct investment growth from high-income countries to low- and middle-income countries over 2004-15. Past a threshold, however, increased robotization in high-income countries has a negative impact on foreign direct investment growth. Only 3 percent of the sample exceeds the threshold level beyond which further automation results in negative foreign direct investment growth and is consistent with re-shoring. For another 25 percent of the sample, the impact of robotization on the growth of foreign direct investment is positive, but at a rate that is declining. So, although these are early warning signs, automation in high-income countries has resulted in growing foreign direct investment for more than two-thirds of the sample under consideration. Some geese may be slowing, but for now, most continue to fly.
    Keywords: Common Carriers Industry,Food&Beverage Industry,Pulp&Paper Industry,General Manufacturing,Construction Industry,Business Cycles and Stabilization Policies,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,International Trade and Trade Rules,Transport Services,Labor Markets,Rural Labor Markets,Trade and Services
    Date: 2019–12–26
  26. By: Pamina Koenig (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Sandra Poncet (CEPII - Centre d'études prospectives et d'informations internationales - CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Keywords: Reputation shocks,multinational firms,activism,trade,imports
    Date: 2019–12
  27. By: Simplice A. Asongu (Yaoundé/Cameroon)
    Abstract: Linkages between foreign aid, terrorism and natural resource (fuel and iron ore) exports are investigated in this study. The focus is on 78 developing countries with data for the period 1984 to 2008. The generalised method of moment is employed as empirical strategy. Three main foreign aid variables are used for the analysis, namely: bilateral aid, multilateral aid and total aid. The corresponding terrorism variables employed are: domestic terrorism, transnational terrorism, unclear terrorism and total terrorism. The following findings are established. First, the criteria informing the validity of specifications corresponding to iron ore exports do not hold. Second, there is evidence of convergence in fuel exports. Third, whereas the unconditional impacts of aid dynamics are not significant, the unconditional impacts of terrorism dynamics are consistently positive on fuel exports. Fourth, the interaction between terrorism and aid dynamics consistently display negative signs, with corresponding modifying aid thresholds within respective ranges. Unexpected signs are elicited and policy implications discussed. Given the unexpected results, an extended analysis is performed in which net effects are computed. These net effects are constitutive of the unconditional effect from terrorism and the conditional impacts from the interaction between foreign aid and terrorism dynamics. Based on the extended analysis, bilateral aid and total aid modulate terrorism dynamics to induce net positive effects on fuel exports while multilateral aid moderates terrorism dynamics to engender negative net effects on fuel exports. The research improves extant knowledge on nexuses between resources, terrorism and foreign aid.
    Keywords: Foreign Aid; Exports; Natural Resources; Terrorism; Economic Development
    JEL: F40 F23 F35 Q34 O40
    Date: 2019–01
  28. By: Lopez Cordova,Jose Ernesto
    Abstract: Tourism is an important source of foreign exchange and employment across developing economies. A scant literature has explored the relationship between tourism and the advent of the internet. This paper contributes to the tourism-trade literature and studies the empirical relationship between international tourism and the adoption of digital technologies that facilitate search about tourism opportunities across countries. It links foreign visits with the spread of the use of the internet in sending countries and the level of development of business-to-consumer digital tools in host countries. The paper estimates a well-specified gravity model of tourist arrivals between country pairs with panel data. The results indicate that frictions affecting bilateral tourism flows have been attenuated by the advent of digital tools. The absolute value of the effects of bilateral geographic distance, language differences, and border-contiguity seem to be reduced by the use of the internet by potential tourists and the business sector in host countries. The results are robust to alternative proxies for internet use for tourism search proxied by data from Google trends. The paper also presents simulations of the potential impacts of advances in the adoption of digital tools over time, linking the adoption process to mechanisms of technology adoption that are commonplace in the literature.
    Date: 2020–02–13
  29. By: Viollaz,Mariana; Darko,Francis Addeah; Mason,Andrew D.
    Abstract: This paper analyzes the simultaneous impacts and interplay of exports and technology adoption on the demand for different types of skills and aggregate labor market indicators in Indonesia over a period characterized by a commodity boom (2005-10) and a period of declining exports (2011-15). The results for the 2005-10 sub-period are in line with the evidence available for developed countries, that is, technology is complementary to analytical and soft skills and is labor-saving, while exports are labor increasing. In 2011-15, the relationship between technology and skills, and between technology and labor demand, differs from the evidence available for the developed world. That is, technology increases the demand for analytical and interpersonal skills in high-exporting industries only, and technology and exports are labor increasing for some population subgroups. The findings for the more recent period confirm that differences in economic structures matter for understanding the impacts of technological advances and globalization.
    Date: 2019–12–19
  30. By: Anna Wong (University of Chicago; Board of Governors of the Federal Reserve System (U.S.)); Matthew Higgins (National Bureau of Economic Research; Georgia Institute of Technology; Federal Reserve Bank of New York; College of Management); Thomas Klitgaard
    Abstract: Chinese residents are increasingly traveling to see the rest of the world, logging a total of 162 million foreign visits in 2018, up from 57 million in 2010. Increased travel spending by Chinese residents is acting to reduce the country's trade surplus because such spending is counted as a services import. However, there appears to be a quirk in the Chinese data that results in a significant understatement of the offsetting spending by visitors to China (a services export). According to other Chinese data, this understatement totaled $85 billion in 2018. If so, China's deficit in travel services is smaller than officially reported, and its trade surplus correspondingly larger.
    Keywords: China international trade service balance of payments imports exports tourism current account balance
    JEL: F00
  31. By: Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
    Abstract: Globalization has presented new challenges for SMEs due to the increased competition, and as a result, the mortality rate of SMEs after a shorter period of commencement is relatively high. Accordingly, SMEs necessity to adopt survival strategies and strategic decisions to succeed in the business environment facing global challenges. This study attempted to critically review the existing literature on the global challenge for SMEs to identify the survival and succeeding strategies of SMEs in the current competitive business environment. Published reports in the field by the recognized multilateral organizations and seventy-five excellent research papers published by four recognized journal publishing companies: Emerald, Elsevier, Tayler & Francis, and MDPI were selected for inclusion in this review. Based on this review, it has been found that leading global challenges for SMEs in economic globalization include: global market competition, global financial and economic crisis, information communication technology, rise of Multinational Corporations, Transnational Corporations, changing profile of consumers and their preferences, trade dumping, international terrorism and religious conflicts, and trade wars. Further research could take on survival Strategies of SMEs in the industrial level to identify the sustainability-oriented specific policies. As well as a need for a stronger theoretical examination on survival strategies of SMEs in the global challenges.
    Keywords: Globalization, Global Challenges, Survival Strategies, Competitiveness, Small and Medium Enterprises
    JEL: M21
    Date: 2019–12–20
  32. By: Stark, Oded; Byra, Lukasz; Kosiorowski, Grzegorz
    Abstract: We offer an explanation for the inconclusive results of empirical studies into the relationship between the magnitude of the Gini coefficient of income distribution at origin and the intensity of migration. Bearing in mind the substantial literature that identifies relative deprivation as an important determinant of migration behavior, we study the relationship between aggregate or total relative deprivation, TRD, the Gini coefficient, G, and migration. We show that for a given change of incomes, TRD and G can behave differently. We present examples where, in the case of universal increases in incomes, TRD increases while G does not change; G decreases while TRD does not change; and G decreases while TRD increases. We generalize these examples into formal criteria, providing sufficient conditions on the initial and final income vectors under which incongruence between the directions of changes of G and of TRD occur. Our analysis leads us to infer that when the incentive to migrate increases with TRD, then this response can co-exist with no change of G or with a decrease of G.
    Keywords: Institutional and Behavioral Economics, Labor and Human Capital, Political Economy, Risk and Uncertainty
    Date: 2020–02–10
  33. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes)
    Abstract: Today's economic globalization is not in itself a factor of peace. With its development, the economic war has taken other strategic forms imposed both by the most powerful countries and by the large multinational corporations, which ultimately account only for Washington or possibly for those of Chinese origin, in Beijing. It is a question of using the adapted weapons to obtain a right or the exercise of domination. Economic and military values become inseparable, which clearly expresses the close relationship between globalization and the balance of power in today's world.
    Date: 2019–11
  34. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper estimates conditional demand models and, using a joint approach for the period 2008-2017, examines the impact of immigration and different measures of offshoring on the labour demand and demand elasticities of native workers in four different types of occupational groups managers/professionals, clerical workers, craft (skilled) workers and manual workers. The analysis is conducted using data for four EU economies Austria, Belgium, France and Spain. Our results point to important and occupation-specific direct and indirect effects of immigration and offshoring. Both offshoring – particularly services offshoring – and immigration have negative direct employment effects on all occupations, but native clerks and manual workers are affected the most, and native managers/professionals the least. Generally, offshoring exerts a stronger direct negative employment effect than does immigration. Our results also identify an important (labour demand) elasticity-channel of immigration and offshoring and show that some groups of native workers can also actually gain from globalisation through an improvement in their wage-bargaining position. Overall, our results indicate a deterioration in the bargaining power of native manual workers arising from both immigration and offshoring; an improvement in the bargaining position of native craft workers in the case of both immigration and offshoring; and an improvement in the bargaining position of native clerical workers and managers/professionals in the case of offshoring only. Finally, our analysis of the cross-effects of immigration highlights the important role of migrant managers/professionals for the labour demand and demand elasticities (bargaining power) of native clerical workers, craft and manual workers. Disclaimer Funding from the Austrian Federal Ministry of Labour, Social Affairs, Health and Consumer Protection is gratefully acknowledged.
    Keywords: Offshoring, immigration, labour demand elasticity, bargaining power, occupations
    JEL: F16 F22 F66
    Date: 2020–01

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